NFIB

It Doesn't Have to Be in Writing
03/ 28/ 2002

by Robert James Skousen

What e-sign legislation means to you

It doesn't seem possible, but now signing your name can be as simple as sending an e-mail. In response to the tremendous growth of Internet business, the Electronic Signatures Global and National Commerce Act, or "E-Sign" Legislation, was signed into law last year. This gives an electronic signature over the Internet the same legal validity as a traditional signature on paper. It also provides online customers an easy way to revert to paper contracting at any point during the process.

Historically, a law called the "statute of frauds" required that certain transactions be in writing, posing a threat to e-business. Some form of the statute of frauds is in force today in most states. Now, E-Sign legislation permits transactions to take place electronically, but only if the parties agree to conduct them that way. Consumers are not required to use or accept electronic records, signatures, or contracts, unless they specifically and expressly agree to do so. E-signatures do not apply to wills and trusts and all existing notice and disclosure requirements for certain transactions, (i.e., lending disclosure, real estate disclosure and other disclosures) will continue to remain in force. Nevertheless consumers may decide to receive these disclosures electronically. E-Sign legislation allows consumers to withdraw the consent that they have given to receive notices or execute documents electronically. An additional benefit is that the law allows records of transactions to be stored electronically, in theory doing away with storage of paper records. Those desiring to do business over the Internet need to be careful that they draft their disclosures to take into account the availability of Electronic Signatures and comply with all aspects of the law.

Skousen is CEO of the law firm Skousen & Skousen in Los Angeles. For more on this topic, please contact him at rjs@skousenlaw.com.

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This article originally appeared in the May/June 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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